STATE AGENCY ACTION REPORT - The Agency For …ahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/9981.pdfSTATE AGENCY ACTION REPORT ... Representative, Joe Negron of District 82, Stuart,

STATE AGENCY ACTION REPORT

CON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number:

Martin Memorial Medical Center, Inc./CON #9981 P.O. Box 9010 Stuart, Florida 34995

Authorized Representative: Richmond M. Harman, CEO

(772) 287-5200

Christopher H. Coffey Director of Planning

2. Service District/Subdistrict

District 9/Subdistrict 2 (Martin and St. Lucie Counties)

B. PUBLIC HEARING

No public hearing was requested or held. Fifty-one letters were received regarding the establishment of an 80-bed acute care hospital by the omissions deadline. The majority of the letters were in the form of testimonials from area residents who have had difficulty accessing emergency room care due to long drive times, congested traffic, and lack of a health care facility in their immediate community. These letters are similar in content and attest to the rapid growth of the western Port St. Lucie area and the negative impacts on community infrastructures resulting from such growth. President and Founder of Torrey Pines Institute for Molecular Studies, Richard A. Houghten, Ph.D. submitted a letter of support. In this letter, Dr. Houghten states that he is looking forward to collaborating with Martin Memorial on clinical trials by establishing an inpatient clinical research unit at the proposed new hospital. Torrey Pines Institute for

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CON Action Numbers: 9981

Molecular Studies will be located nearly adjacent to the proposed hospital in a 100,000 square foot research facility which is now under construction. A letter of support was also submitted by John A. Kolosky, Executive Vice President, Planning and Finance of H. Lee Moffitt Cancer Center & Research Institute. The letter briefly discussed its long standing affiliation with Martin Memorial Health Systems and its continued support of Martin Memorial Medical Center. Wes McCurry, President of Tradition Development Co., LLC and Paul Hegener, President of Core Communities, both submitted letters of support for the proposed hospital. Included in the support materials was a resolution from the city council of the City of Port St. Lucie, Florida, declaring its support of the application of Martin Memorial Medical Center, Inc., to bring a new hospital to western Port St. Lucie. Letters were also submitted by former Representative, Joe Negron of District 82, Stuart, Florida and Representative Gayle Harrell of District 81, Port St. Lucie, Florida. Former Representative Negron states that the proposed hospital will improve access for residents as well as enhance effectiveness of the St. Lucie County Fire-Rescue system. Florida State Senator, Ken Pruitt of District 28 also submitted a general letter of support for the project. The Mayor, Vice-Mayor, City Council Persons, the St. Lucie County School Board, St. Lucie County Fire Chief and many others submitted letters supporting the applicant. Seven letters of opposition were received. Opposition letters were sent from St. Lucie Medical Center and Lawnwood Regional Medical Center & Heart Institute. Both letters included a copy of a report prepared by Richard A. Baehr and Associates, Inc. on April 16, 2007 entitled Analysis of St. Lucie Market Area and Need for Martin Memorial Medical Center’s Proposed Satellite Hospital in St. Lucie County. The conclusions of this analysis include the following: Projected population growth for the proposed service area is not sufficient to justify a new hospital; no geographic problems exist for patients in the service area; this project would impact St. Lucie Medical Center, which currently maintains the leading primary market share for this area; this project would impact Lawnwood Regional Medical Center, which currently operates as a “safety net” hospital for residents of St. Lucie County; no need is demonstrated for an 80-bed hospital in St. Lucie County. The other opposition letters were from area physicians whose main concern is that the proposed new hospital would strain existing health care resources.

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C. PROJECT SUMMARY

Martin Memorial Medical Center, Inc. (CON #9887) is applying to establish an 80-bed acute care hospital in St. Lucie County, District 9, Subdistrict 2. The applicant is a private, not-for-profit corporation operating Martin Memorial Medical Center and Martin Memorial Hospital – South. Both hospitals are located within the applicant’s proposed service area, District 9, Subdistrict 2 (Martin and St. Lucie Counties). Martin Memorial is currently licensed for 344 acute care beds and five Level II NICU beds. The applicant operates 244 of these beds from Martin Memorial Medical Center (the North Campus) and 100 beds at Martin Memorial South. The proposed site is within a planned community in western St. Lucie County, which is not owned by nor affiliated with the applicant. The applicant proposes the following conditions for CON: (1) Martin Memorial will partner with Torrey Pines Institute for

Molecular Studies for the provision of resources associated with clinical trials and life science research.

(2) Martin Memorial will continue to support the Volunteers in Medicine program with free inpatient and outpatient hospital services, outpatient laboratory, diagnostic and treatment services at a value of no less than $750,000 of charges per year for the next 10 years.

(3) Martin Memorial commits to provide support to other community social services organizations in the form of cash, goods and services valued at not less than $75,000 annually for the next 10 years. This represents a commitment of $750,000 to support organizations such as Meals on Wheels, American Cancer Society, American Heart Association, etc.

(4) Martin Memorial will continue its support of Florida Atlantic University Nursing School, Indian River Community College and other area nursing and allied health schools with at least $75,000 per year in services or goods for the next 10 years to help ensure an adequate supply of well-trained health care professionals.

(5) Martin Memorial commits to establishing a volunteers program (based on its current successful program in Martin County) in the Port St. Lucie area to involve local high schools in encouraging teens to volunteer in health care settings and to encourage health care careers.

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(6) Martin Memorial will partner with the St. Lucie school system in the development of a High School Medical Academy.

(7) Martin Memorial will make the West Port St. Lucie Hospital available as a training site for area nursing and allied health schools and for the Florida State University physician training program. (It is not clear whether the applicant is affiliated with Florida State University. There were no letters of support provided in the application from Florida State University).

(8) Martin Memorial commits to develop West Port St. Lucie Hospital south of Tradition Parkway, east of Village Parkway, adjacent to the Torrey Pines headquarters and the I-95 Gatlin Boulevard exit.

(9) Martin Memorial will provide a minimum combined 7.5 percent to include the percentage of Medicaid and Medicaid HMO inpatient admissions compared to inpatient admissions plus the percentage of charity care inpatient gross revenues compared to total inpatient gross revenues. (Although it is not clear what this means, schedules submitted by the applicant show that 7.5 percent of the total annual patient days in 344 beds operated by Martin Memorial Hospital will be provided to Medicaid and Medicaid HMO patients. More appropriate to this application, financial schedules also show that 11.1 percent of the total annual patient days in the proposed 80-bed facility will be provided to Medicaid and Medicaid HMO patients. Should the project be approved, the applicant will be conditioned to provide 11.1 percent of total annual patient days in the 80-bed facility to Medicaid and Medicaid HMO patients).

(10) Martin Memorial commits to providing a minimum of $250,000 per year for Medicaid and/or charity outreach programs within west Port St. Lucie area for the first five years of operation.

The total project cost is estimated at $116,970,000. Construction costs are projected at $47,834,500 and the project will involve 136,670 GSF of new construction.

D. REVIEW PROCEDURE

The evaluation process is structured by the Certificate of Need review criteria found in Section 408.035, Florida Statutes and rules of the State of Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code. These criteria form the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria.

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Analysis of an applicant's capability to undertake the proposed project successfully is conducted by evaluating the responses and data provided in the application, and independent information gathered by the reviewer.

Applications are analyzed to identify strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant(s) best meet the review criteria.

Rule 59C-1.010(3)(b), Florida Administrative Code, prohibits any amendments once an application has been deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the Certification of the Applicant.

As part of the fact-finding, the consultant Cheslyn Green analyzed the application with consultation from the financial analyst Ryan Fitch, who reviewed the financial data; architect Scott Waltz who evaluated the architecturals and the schematic drawings; and Chief of Health Facility Regulation, Jeff Gregg who acted as advisor.

E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA

The following indicate the level of conformity of the proposed project with the review criteria and application content requirements found in Sections 408.035, and 408.037, and applicable rules of the State of Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code.

1. Fixed Need Pool

a. Does the project proposed respond to need as published by a fixed

need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Ch. 59C-1.008(2), Florida Administrative Code.

Certificate of Need (CON) regulations do not contain an acute care bed need methodology. Therefore, no fixed need pool was published for acute care beds in District 9, Subdistrict 2, Martin and St. Lucie Counties.

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Acute care beds may be added at any existing acute care hospital at any time unless that hospital is located in a statutorily defined “low growth county”1. In 2007, the only county in Florida to meet the CON definition of low-growth was Escambia County.

b. If no Agency rule exists, the applicant will be responsible for demonstrating need through a needs assessment methodology described in section 59C-1.008 (2) (e) 2. Florida Administrative Code (F.A.C.) which includes, at a minimum, consideration of the following topics: 1. Population demographics and dynamics 2. Availability, utilization and quality of like services in the district,

subdistrict or both; 3. Medical treatment trends; and 4. Market conditions The applicant states that need for the proposed project, is demonstrated for the reasons listed below: a) Explosive population growth in western Port St. Lucie. b) Ability to improve access significantly without substantial adverse

impact to existing providers. c) Improved access for emergency care. d) Improved access for obstetrical care. e) Improved access in the event of natural disaster. f) Sound long-term health planning to ensure resources are distributed

where the needs exist. g) Fostering of medical and clinical research and education. h) Fostering of competition that will promote quality and cost-

effectiveness. i) Improved access to services for medically underserved or underfunded

populations. j) Martin Memorial’s commitment to the Port St. Lucie area. k) Broad-based community support.

1 Section 408.036 (1)(g), Florida Statutes: A low-growth county is defined as a county that has: (1) A hospital with an occupancy rate for licensed acute care which has been below 60 percent for the previous five years; (2) Experienced a growth rate of four percent or less for the most recent three-year period for which data are available, as determined using the population statistics published in the most recent edition of the Florida Statistical Abstract; (3) A population of 400,000 or fewer according to the most recent edition of the Florida Statistical Abstract; and (4) A hospital that has combined gross revenue from Medicaid and charity patients which exceeds $60 million per year for the previous two years.

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a. Population Growth in western Port St. Lucie

District 9, Subdistrict 2 had a total of 798 licensed acute care beds with an occupancy rate of 62.64 percent for the 12-month reporting period that ended in June 2006. More recently reported, but not yet published utilization data, shows a slight increase in average utilization as well as additional beds. During calendar year 2006, the total number of licensed beds in the subdistrict was 806 and occupancy was 64.12 percent.

The following table illustrates utilization levels and the acute bed inventory for the four District 9, Subdistrict 2 facilities. Martin Memorial added eight acute care beds between June of 2006 and December of 2006. Subdistrict utilization increased at each facility and including Martin Memorial, even with the addition of eight acute care beds.

Acute Care Bed Utilization and Number of Acute Beds

District 9, Subdistrict 2 Facility # beds 7/2005 – 6/2006 # beds 1/2006 – 12/2006 St. Lucie Medical Center 194 69.06% 194 70.47% Lawnwood Regional Medical Center 273 62.70% 273 63.42% Martin Memorial Medical Center 231 61.29% 239 64.07% Martin Memorial Hospital South 100 53.15% 100 53.86% Average Subdistrict 2 798 62.64% 806 64.12% Source: Florida Hospital Bed Need Projections and Service Utilization by District; published 1/26/2007 and unpublished calendar year 2006 utilization data.

In comparing calendar years, calendar year 2006 utilization is also higher than calendar year 2005 utilization. In the 798 beds licensed in calendar year 2005, subdistrict average utilization was 62.39 percent. Utilization at each facility is also higher in calendar year 2006 than calendar year (CY) 2005. The applicant provides numerous population projections concluding that growth rates in the area it has defined as its primary service area2 (PSA) will exceed that of the district and county. The applicant also indicates that it is projected to increase up to 26 percent from the years 2006 to 2013. The U.S. Census Bureau Public Information Office released a finding on June 30, 2005 that Port St. Lucie, Florida had the nation’s fastest growth rate, 12 percent, among cities with 100,000 or more population

2 The applicant’s primary service area includes zip codes: 34988, 34987, 34986, 34983, 34984 and 34953

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between July 1, 2003 and July 1, 2004. St. Lucie County was recognized by the U.S. Census Bureau as the number seven county in the nation for fastest housing gains between July 1, 2003 and July 1, 2004. The following table illustrates 10 years of population projections as published by the Agency for St. Lucie County.

Population Estimates and Projections for St. Lucie County

Subdistrict 2 and District 9

Date

Total St. Lucie County

Population

Growth

%

Total Subdistrict 2 Population

Growth

%

Total District

Population

Growth

% 1-Jul-01 199,420 328,786 1,642,709 1-Jul-02 205,083 2.93 336,936 2.48 1,682,599 2.43 1-Jul-03 215,377 5.02 350,629 4.06 1,730,331 2.84 1-Jul-04 229,747 6.67 368,220 4.78 1,782,737 3.03 1-Jul-05 243,061 5.78 384,932 4.54 1,825,868 2.42 1-Jul-06 253,772 4.41 398,909 3.63 1,870,812 2.46 1-Jul-07 262,540 3.46 410,788 2.97 1,916,181 2.43 1-Jul-08 269,885 2.80 421,149 2.52 1,961,768 2.38 1-Jul-09 276,291 2.37 430,493 2.22 2,007,198 2.16 1-Jul-10 282,828 2.65 439,893 2.18 2,051,819 2.22 1-Jul-11 294,938 4.28 450,874 2.50 2,116,139 3.13

Source: Agency for Health Care Administration Population Estimates Published 9/2006.

The above population rates in St. Lucie County outpaced or are projected to outpace the rates of the subdistrict and district for all of the above years. The applicant previously submitted a CON application (CON #9944) to establish a hospital in the western St. Lucie County and compared earlier population estimates to more recent ones to illustrate that projections have increased, not decreased, since its last application.

The following graph illustrates the utilization of Subdistrict 2 facilities for 2002-2006.

Utilization of Acute Care Beds at Existing Subdistrict 2 Facilities CY 2002-2006

District 9 Subdistrict 2 Facilities # of Beds % of Utilization 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Lawnwood Regional Med.Center 273 273 273 273 273 59.38 59.24 61.95 60.15 63.42 St. Lucie Medical Center 170 194 194 194 194 77.02 76.71 70.86 70.12 70.47 Martin Memorial Med. Center 231 231 231 231 239 65.94 65.57 62.91 61.92 64.07 Martin Memorial Hospital South 100 100 100 100 100 52.76 51.91 62.13 53.58 53.86 Total 774 798 798 798 806 64.36 64.12 61.33 62.39 64.12

Source: Florida Hospital Bed Need Projections and Utilizations by District CY 2002-2006

Utilization has remained relatively stable over the past five years given the addition of 32 acute care beds. Had acute beds not been added at Lawnwood, St. Lucie Medical Center and Martin Memorial, utilization would have been 66.44 percent in CY 2006. St. Lucie Medical Center had 170 acute care beds by the end of calendar year 2002 and 194 by the end of 2006. Lawnwood

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Regional Medical Center had 273 beds at the end CY 2002 and 273 by the end of 2006. The applicant’s main facility had 231 acute care beds by the end of CY 2002 and 239 by the end of CY 2006. Martin Memorial South had 100 licensed acute care beds by the end of (CY) 2002 and 100 acute care beds by the end of 2006. Recent changes in CON legislation allow hospitals in non-low growth counties like St. Lucie to add beds with notification of the agency outside of CON review.

The applicant submitted what it represents is as a copy of a memorandum sent out from St. Lucie Medical Center’s Chief Executive Officer (CEO), Mr. Gary Cantrell, to that facility’s medical staff in January of 2007 advising that the “season is upon us” and that St. Lucie Medical Center was experiencing an “extremely high census”. Mr. Cantrell advised staff that all direct and emergency room (ER) admissions should be “screened intensely for ICU or PCU appropriateness”.3 Representatives of St. Lucie Medical Center advised Agency staff in a meeting prior to this application being determined to be complete, that the hospital has space available for additional acute care beds. However, St. Lucie Medical Center has not added acute beds or notified the Agency of its intent to add acute care beds to meet the demands of the “season”. St. Lucie Medical Center has historically served the highest percentage of non-tertiary4 patients in the applicant’s PSA, as illustrated below.

3 CON #9981, page 15. 4 "Tertiary health service" means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service. Examples of such service include, but are not limited to, pediatric cardiac catheterization, pediatric open-heart surgery, organ transplantation, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service.

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Historic Non-Tertiary Discharges5 by Facility for Primary Service Area

Residents 2002 though 2005 Zip Codes 34988, 34987, 34986, 34983, 34984 and 34953

Facility

Discharges 02

Discharges 03

Discharges 04

Discharges 05

St. Lucie Medical Center 56.29% 55.64% 56.80% 53.88% Lawnwood Regional Medical Ctr. 10.21% 9.75% 10.02% 12.05% Martin Memorial Medical Center 17.76% 17.81% 15.35% 15.26% Martin Memorial Hospital South 2.03% 1.84% 2.38% 2.13% Subdistrict 2 out-migration 13.70% 14.96% 15.44% 16.68% Source: Florida Center for Health Information and Policy Analysis The two Martin Memorial facilities provided a combined 19.79 percent share of the discharges of PSA residents in 2002 and 17.39 percent in 2005. Data reported to the Florida Center for Health Information and Policy Analysis for 2006 is not completely cleared. For the first nine months of 2006, the applicant’s market share has increased. From January to September of 2006, Martin Memorial’s two facilities served 26.47 percent of the discharges from this service area and 22.58 percent of the patient days as shown below.

Non-Tertiary6 Patient Days in Zip Codes 34988, 34987, 34986, 34983, 34984 & 34953

October 2005 though September 2006 Hospital # Acute Beds % of Patient Days % of Discharges Martin Memorial MC 239 20.40% 24.64% Martin Memorial South 100 2.18% 1.83% Lawnwood RMC 273 14.79% 14.26% St. Lucie Medical Center 194 51.77% 44.14% Subdistrict 2 out-migration

10.82% 15.13%

Total 806 100.00% 100.00% Source: Florida Center for Health Information and Policy Analysis The map below locates the existing subdistrict facilities and the proposed location of this project. The proposed facility is approximately 13 direct miles from the coast:

5 Excludes DRGS: 103-111, 124-125, 154, 191, 302, 385-389, 424-438, 462, 468, 480, 481, 484-488, 495-496, 504-518, 521-523, 525-528, 535-536, 541-543, 547-559. 6Ibid.

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District 9 Subdistrict 2 Existing Hospitals and Proposed Location

Source: Microsoft Mappoint 2004

b. Ability to improve access significantly without substantial

adverse impact to existing providers

The applicant states that neither St. Lucie Medical Center nor Lawnwood Regional Medical Center (Lawnwood) is likely to suffer substantial adverse impact as a result of the proposed West Port St. Lucie Hospital. The applicant begins by stating West Port St. Lucie Hospital will be approximately 10 to 11 miles driving distance from St. Lucie Medical Center and 15 miles from Lawnwood and that the placement of West Port St. Lucie Hospital west of I-95 provides access to the growing population while minimizing adverse impact. The applicant states that Martin Memorial already serves a large number of patients from the PSA. Therefore, the applicant is anticipating a shift of patients from Martin Memorial’s main campus approximately15 miles from the proposed new location to West Port St. Lucie Hospital.

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Mileage Between Existing and Proposed Facilities Subdistrict 2

Source: Expedia.com

The applicant provides historic growth data that indicates buyers of property being developed in western St. Lucie County include both retirees and younger families. These two populations generally make up the majority of patients served by acute care facilities. Data from the Florida Center for Health Information and Policy Analysis show that 33 percent of applicant’s PSA residents accessing hospital services (tertiary and non-tertiary) are age 65 and older and 21 percent are women between the ages of 15 and 44 (tertiary and non-tertiary) during the 12-month period ending September 2006.

During the 12-month period ending September 2006, 22.58 percent of all non-tertiary PSA patients went to one of Martin Memorial’s two facilities, 51.77 percent went to St. Lucie Medical Center and 14.79 percent went to Lawnwood for care.

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Non-Tertiary7 Patient Days in

Zip Codes 34988, 34987, 34986, 34983, 34984 & 34953 October 2005 though September 2006

Hospital # Acute Beds PSA Patient Days % of Patient Days Martin Memorial MC 239 10,587 20.40% Martin Memorial South 100 1,134 2.18% Lawnwood RMC 273 7,676 14.79% St. Lucie Medical Center 194 26,859 51.77% Other Hospitals 3,683 5,617 10.82% Total 4,489 51,873 100.00% Source: Florida Center for Health Information and Policy Analysis

The largest percent of these patients went to St. Lucie Medical Center. With regards to out-migration, 10.82 percent of patient days were provided outside of the subdistrict.

OB8 Patient Days in Zip Codes 34988, 34987, 34986, 34983, 34984 & 34953

October 2005 though September 2006 Hospital

# Acute Beds

PSA Patient Days

% of Patient Days

Martin Memorial MC 239 2,186 38.56% Martin Memorial South 100 9 0.15% Lawnwood RMC 273 1,082 19.08% St. Lucie Medical Center 194 1,153 20.34% Other Hospitals 1,238 21.87% Total 806 5,668 100.00% Source: Florida Center for Health Information and Policy Analysis

During the 12-month period ending September 2006, 38.71 percent of all OB PSA patients went to one of Martin Memorial’s two facilities, 20.34 percent went to St. Lucie Medical Center and 19.08 percent went to Lawnwood for care. The largest percent of these patients went to Martin Memorial Medical Center, 38.56 percent. With regards to out-migration, 21.87 percent of OB patient days were provided outside of the subdistrict.

The applicant is proposing to capture more of its proposed primary service area’s overall non-tertiary care market.

Proposed & Current Hospital Market Share

Primary Service Area Proposed 2013 Current

28.6% 16% Source: CON # 9981, page 81 and Florida Center for Health Information and Policy Analysis data October 2005 – September 2006

7 Excludes DRGS: 103-111, 124-125, 154, 191, 302, 385-389, 424-438, 462, 468, 480, 481, 484-488, 495-496, 504-518, 521-523, 525-528, 535-536, 541-543, 547-559. 8 Includes all discharges in DRGs 370-384

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The applicant expects to derive approximately 80 to 82 percent of its admissions from the defined ZIP code areas of the PSA; admissions from the secondary service area are expected to account for an additional nine to 12 percent. Other portions of St. Lucie County are projected to represent three to four percent, with approximately five percent of total admissions expected to come from outside of St. Lucie County. The applicant therefore expects to capture almost one half of all non-tertiary subdistrict out-migrating residents.

The applicant discusses impact on Lawnwood Regional Medical Center, the service area’s largest provider of care to the medically indigent population according to 2005 financial data reported by hospitals to the Agency. The applicant believes that Lawnwood will benefit from the growth projected in the northern part of the county in Cloudland Grove, Capron Lake and Visions at Indrio. According to information presented by the applicant, these areas combined have the potential of increasing the population in that Fort Pierce area by a projected 48,000 residents.

c. Improved access for emergency care

The applicant states that locating a new acute care facility on the west side of I-95 and close to the interstate will significantly enhance access for emergency services for area residents. It is also felt that the location would provide ease of access along a major hurricane evacuation route. Due to a limited number of bridges and the expected increase in traffic related to population growth, the applicant states that the proposed service area should be viewed as a distinct and unique area for acute care and emergency services planning purposes. Following is the same map shown above with eight and 13-mile radius indicators:

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District 9 – Subdistrict 2 Facilities and Proposed Location w/Radius Indicators

Source: Microsoft Mappoint 2004

As seen in the map above, the existing four Subdistrict 2 facilities are closer to the Atlantic coastline than is the proposed satellite site. The proposed site is within 13 direct miles of the shoreline and Martin Memorial’s main campus, from which patients were evacuated in 2004. The surge zones indicated for St. Lucie County by the Department of Community Affairs Division of Emergency Management (DCA/DEM) include the areas immediately surrounding the banks of the North Fork of the St. Lucie River. However, it is also noted that most of the surge zones extending beyond the river’s immediate banks are indicated by the DCA/DEM for potential storm surge in the event of a Category 5 hurricane.

The North Fork of the St. Lucie River is a natural barrier between eastern and western Port St. Lucie. There are two bridges that cross the river. The applicant has presented support from local officials regarding traffic patterns and problems created by the roadways and bridges in the county. One such letter of support was from Jay Sizemore, Fire Chief of the St. Lucie County Fire

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District who emphasizes that there is a problem with hospital and emergency room access due to transport delays. Active discussion of traffic increases due to population and economic development continue to be of concern according to the applicant. The applicant states that based on preliminary assessments of local travel distances and times, current travel distances and times (under optimal conditions) from the western portion of Port St. Lucie ( e.g. Tradition and St. Lucie West) generally range from 20 to 30 minutes to access the nearest hospital facility, St. Lucie Medical Center. At busy times, traffic delays stretch travel times much longer, especially when the bridges are backed up. The proposed Tradition site is approximately 10 to 11 miles driving distance from St. Lucie Medical Center and 16 miles from Lawnwood. Mr. Sizemore and other writers of support indicate that traffic conditions are expected to worsen as the population continues to grow.

The applicant provided emergency medical services (EMS) data from the Florida Department of Health for St. Lucie County EMS transports to general hospitals and trauma centers between 2003 and 2006. The applicant notes that its proposed location near I95 will facilitate EMS transport. As shown in the table below, transports increased by nearly 25 percent in three years.

Growth in St. Lucie County EMS Transports

Patient Disposition

2003

2006

Percent Increase

EMS Transports to Hospitals and Trauma Centers 23,945 29,867 24.7% Total Per Day 66 82

Source: CON #9981 page 98 referencing Department of Health, Bureau of EMS, on-line per-hospital yearly report 2003 and 2006 at http://clientdoh.doh.state.fl.us/IRM00prehospital/IncidentPatientDispRept.asp?REPTYEAR=2003&REPTREGION=56

It is noted that there are no trauma centers in Martin or St. Lucie Counties. Patients transported to trauma centers would continue to be transported outside of the service area. Following is a map showing the location of Florida trauma centers:

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http://clientdoh.doh.state.fl.us/IRM00prehospital/IncidentPatientDispRept.asp?REPTYEAR=2003&REPTREGION=56

http://clientdoh.doh.state.fl.us/IRM00prehospital/IncidentPatientDispRept.asp?REPTYEAR=2003&REPTREGION=56


Source: http://www.doh.state.fl.us/demo/Trauma/PDFs/TC_Map.pdf The applicant states that Martin Memorial’s emergency department (ED) serves a large number of PSA residents even though St. Lucie Medical Center is closer to residents of western Port St. Lucie. The applicant states that for CY 2006, Martin Memorial’s two hospitals cared for 5,789 emergency department (ED) patients (non-admitted) from western Port St. Lucie. 4,242 of these patients presented at Martin Memorial’s main campus, with the remaining presenting at the South campus. These 4,242 ED patients at the main campus represented 18 percent of the total number of non-admitted ED cases at the hospital in 2006. The applicant indicates that an emergency department in western Port St. Lucie would relieve the ED at Martin Memorial’s main campus. The applicant provides testimonials from PSA residents regarding emergency services assessibility.9 The applicant also states that it will help improve emergency department wait times, which were

9 Testimonials on page 101-106 of CON E9981, also additional testimonials provided in attachment 18, volume IV of CON #9981.

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http://www.doh.state.fl.us/demo/Trauma/PDFs/TC_Map.pdf


not provided, through improved emergency department physician coverage. The applicant plans to maintain ED coverage through the following planning process10: 1. Anticipating coverage issues by evaluating the need for

physicians by specialty and identifying potential shortage issues as soon as possible.

2. Working with existing physicians and their groups to the

extent possible to encourage them to expand services and recruit additional physicians where needed.

3. Recruiting and employing primary care and specialist

physicians to meet identified area needs when existing physician practices are unable or uninterested in expanding or when malpractice liability costs threaten private practitioners’ ability to maintain a viable practice.

The applicant also discussed its past ability to recruit both general surgeons and neurologists to Martin Memorial Medical Group, which is an affiliate of the applicant and a subsidiary of Martin Memorial Hospital System. As employees of Martin Memorial Medical Group, the physician’s liability coverage falls under Martin Memorial Medical Group coverage thereby relieving one of the stressors that has driven many physicians especially surgeons out of clinical practice. The applicant has physician offices and outpatient services throughout Martin Memorial’s service area. There are four outpatient and physician office centers in Martin County (in Hobe Sound, Palm City, Stuart, and Jensen Beach) and two offices in Port St. Lucie (in east and west Port St. Lucie). The largest center is in St. Lucie West where there are 35 internal medicine and family care specialist and 11 pediatricians. The applicant states it has also added six general surgeons and four neuronsurgeons to Martin Memorial Medical Group. There are approximately 70 physicians employed by Martin Memorial Medical Group.

d. Improved access for obstetrical services

According to ZIP code admission data submitted by the applicant and discussed earlier, Martin Memorial provides the highest percentage of obstetrical services to residents in western St. Lucie County. As shown on maps above, St. Lucie Medical Center is the

10 Discussion of physician ED coverage is on pg. 106-108 of CON #9981.

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closer hospital, yet Martin Memorial’s OB market share for PSA patient days is 38.71percent, while St. Lucie Medical Center’s is 20.34 percent. Travel time for many women choosing Martin Memorial is approximately 40 minutes under good conditions. This travel time would be improved with the approval of the proposed facility.

Out-migration of commercial and commercial HMO/PPO OB patients is higher than out-migration of self-pay and Medicaid patients. This could be an indicator that consumers in the PSA who have ready means of transportation can exercise their preference for providers who are located outside of the service area. Some self-pay and Medicaid patients are less likely to be able to access physicians and hospitals that are further away due to transportation or other resource restraints. The applicant states that the volume of 1,511 obstetrical discharges for the 12 months ending June 30, 2006 was 44 percent higher than the volume of 1,046 for the 12 months ending June 30, 2004, and more than 2.25 times the volume of 663 in 1999. There is also an increase in the population of females of childbearing age which could lead to increases in the number of births generated by the residents of the PSA.

Florida Population Estimates and Projections

Females 15-44

Date

Martin

Growth

%

St. Lucie

Growth

%

Total Sub District 2

Females 15-44

Growth

% Jul-01-05 20,109 41,622 61,731 Jul-01-06 20,235 0.6% 43,206 3.8% 63,441 2.8% Jul-01-07 20,553 1.6% 44,248 2.4% 64,801 2.1% Jul-01-08 20,713 0.8% 44,895 1.5% 65,608 1.2% Jul-01-09 20,815 0.5% 45,294 0.8% 66,109 0.8% Jul-01-10 20,977 0.8% 45,727 0.9% 66,704 0.9% Jul-01-11 21,144 0.8% 46,601 2.0% 67,745 1.6% Jul-01-12 21,300 0.7% 47,468 2.2% 68,768 1.5% Jul-01-13 21,460 0.8% 48,337 1.8% 69,797 1.5% Jul-01-14 21,617 0.7% 49,192 1.8% 70,809 1.5% Jul-01-15 21,779 0.7% 50,053 1.8% 71,832 1.4%

Source: Florida AHCA Populations Estimates 2005-2015

The applicant notes an increase in population of women of child bearing age from 1999-2006. According to the AHCA Population Estimates from 2005-2015 the population of females age 15-44 continues to increase. OB11 Patient Days in Zip Codes 34988, 34987, 34986, 34983, 34984 & 34953

11 Includes all discharges in DRGs 370-384

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October 2005 though September 2006 Hospital # Acute Beds PSA Patient Days % of Patient Days Martin Memorial MC 239 2,186 38.56% Martin Memorial South 100 9 0.15% Lawnwood RMC 273 1,082 19.08% St. Lucie Medical Center 194 1,153 20.34% Subdistrict 2 out-migration 1,238 21.87% Total 806 5,668 100.00% Source: Florida Center for Health Information and Policy Analysis As seen above, 78.13 percent of PSA resident patient days were for obstetrical services were provided within Subdistrict 2. 38.71 percent of PSA patient days for OB services were provided in Martin County Facilities: Martin Memorial Medical Center and Martin Memorial Hospital South; 39.42 percent of the OB patient days were provided in St. Lucie County facilities: St. Lucie Medical Center and Lawnwood Regional Medical Center; and 21.87 percent of OB patient days were provided outside of Subdistrict 2. Some percentage of patients out-migrating may be captured by the proposed new facility.

e. Improved geographic access in the event of a natural disaster

The proposed facility is not located within a mandatory evacuation zone; but is located outside of St. Lucie County hurricane storm surge zones. The applicant states that recent experience with hurricanes has demonstrated the risks of evacuating medical facilities include patient endangerment and resource requirements to effect an evacuation (staff, transportation and supplies, and sheltering space in other facilities). As a non-evacuating facility, the proposed hospital can serve as a receiving facility, accepting patients from coastal facilities that must evacuate.

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The location of the proposed project is away from the storm surge zone for anything other than a Category 5 hurricane. It is located proximate to I-95 and is accessible to the Florida Turnpike as more ramps and interchanges. This location enhances vehicular access to emergency medical care in the event of a natural disaster. The applicant proposes that the project will add a functioning inland ER that can be expanded to meet the increased demand for emergency services after hurricane. The applicant states that a heli-pad is planned for this facility.

f. Sound long-term health planning to ensure resources are

distributed where need exists

The applicant states that a vast majority of residents of the PSA currently seek care at St. Lucie Medical Center and/or Martin Memorial indicating that there is little out-migration. However, the applicant believes that continuing to add beds to existing facilities when there is a growing population in western St. Lucie County is poor health planning. It believes that locating a new facility closer to the area with the greatest population growth is a better use of resources.

g. Fostering of medical and clinical research and education

Martin Memorial’s physicians and nursing staff participate in clinical research and have been involved with coordinated plans to develop a biotechnology park in Tradition. The proposed West Port St. Lucie Hospital and its medical campus will provide a source for clinical trial enrollees, inpatient and outpatient equipment and facilities, and extensive experience setting up and running clinical trials and other research. The Torrey Pines Institute for Molecular Studies is moving its headquarters into Tradition’s planned Biotechnicology Park. Martin Memorial has begun discussions with Torrey Pines exploring collaboration opportunities. Torrey Pines Institute for Molecular Studies is a 501(c)(3) research center dedicated to conducting basic research to advance the understanding of human disease and the improvement of human health. Scientists conduct research in fields associated with a wide variety of major medical conditions, including multiple sclerosis, cancer, heart disease, Types I and II diabetes, infectious diseases, Alzheimer’s, pain, inflammation, AIDS and other infectious diseases, transplant rejection and rheumatoid arthritis.

In one of the letters of support discussed earlier, Torrey Pines Institute President Houghten notes the opportunity for Martin

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Memorial and the Institute to work together and potentially to develop an inpatient clinical research unit. The proposed facility will be located near the Torrey Pines location and the applicant expects this location to enhance this collaboration.

h. Fostering of competition that will promote quality and cost-

effectiveness

Subdistrict 2 is served primarily by two health systems - Martin Memorial Medical Center and Martin Memorial–South located in Martin County) and HCA, which operates St. Lucie Medical Center and Lawnwood Regional Medical Center located in St. Lucie County. A percentage of Port St. Lucie patients can and do access Martin Memorial for inpatient services.

Martin Memorial proposes that its project would foster competition and cost-effectiveness by extending access to managed care plans, including Medicare managed care, for its new hospital. Martin Memorial has about 20 contracts with managed care plans. In 2005 Martin Memorial added America’s Health Choice to its managed care contracts. America’s Health Choice is one of the two health plans in the region offering Medicare HMO coverage. The applicant states that in District 9, Subdistrict 2 Martin Memorial is the only hospital provider with a contract with America’s Health Choice and the new project intends to extend consumer access to this and other managed care plans in the area. However, managed health plan information from the Agency’s Bureau of Managed Care indicates that this plan is available in both Martin and St. Lucie County already. Additionally, Agency records show that an equal number of commercial, Medicaid HMO and Medicare HMO insurance plans are available in Martin and St. Lucie Counties. This project will not foster competition and cost-effectiveness by extending access to managed care plans. The applicant is not a new provider of services in this subdistrict. It is already competing and Agency records confirm that the project will not offer a new choice of managed care to St. Lucie residents. The applicant has stated that it will largely impact its own facility and does not expect to impact St. Lucie Medical Center or Lawnwood.

In the 12 months ending in June 2006 Martin Memorial’s overall charges per case are lower than either of the hospitals located in St. Lucie County.

Charge Comparisons Submitted by the Applicant

Twelve Months Ending June 30, 2006

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Case Mix-Adjusted Charge per Discharge12

PSA Resident Discharges

All Hospital Discharges

St. Lucie Medical Center $28,743 $28,312 Lawnwood Regional Medical Center $30,630 $33,416 Martin Memorial-South $24,021 $23,522 Martin Memorial Medical Center $22,819 $23,589

Source: CON #9981, page 131 Data presented by the applicant differs slightly from case mix adjusted charge per discharge data determined by an Agency Certified Public Accountant (CPA) as shown below.

Charge Comparisons Determined by the Agency Twelve Months Ending June 30, 2006 Case Mix-Adjusted Charge per Discharge13

PSA Resident Discharges

All Hospital Discharges

St. Lucie Medical Center $28,763 $28,287 Lawnwood Regional Medical Center $30,922 $33,634 Martin Memorial-South $24,148 $23,603 Martin Memorial Medical Center $21,837 $23,190

Source: Florida Center for Health Information and Policy Analysis adjusted by Agency CPA. As noted earlier, the applicant is already competing with St. Lucie Medical Center and Lawnwood Regional Medical Center in Subdistrict 2. It is not clear that this project will foster competition and cost-effectiveness because of its lower case-mix adjusted charge per discharge. The applicant has stated that it will largely impact its own facility and does not expect to impact St. Lucie Medical Center or Lawnwood.

i. Improved access to services for medically underserved or underfunded populations. The applicant also proposes to improve access to services for medically underserved/underfunded populations. In 2005, Martin Memorial provided both a higher amount of charity care and a higher percentage of gross revenue for charity than St. Lucie Medical Center, the hospital with the largest market share of PSA residents or Lawnwood Regional Medical Center. Charity care amounts are reported on a charge basis. Lawnwood and St. Lucie Medical Center have higher charges per day therefore their charity care charges for exactly the same services as provided by Martin Memorial will be higher.

Charity Care FY 2005 Percent of Gross

12 Excludes transplants, open heart surgery and angioplasty, newborns, psychiatric and rehabilitation services. 13 Excludes transplants, open heart surgery and angioplasty, newborns, psychiatric and rehabilitation services.

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Hospital Charity Care Revenue Martin Memorial14 $25,575,623 3.4% St. Lucie Medical Center $ 5,960,183 1.2% Lawnwood Regional Medical Center

$14,973,315 2.1%

Source: CON #9981, page 133

The applicant has agreed to condition award of the CON upon serving the underserved and economically disadvantaged by providing “a minimum combined total of 7.5 percent to include the percentage of Medicaid and Medicaid HMO inpatient admissions compared to total inpatient admissions plus the percentage of charity care inpatient gross revenues compared to total inpatient gross revenues”. Although it is not clear what this means, schedules submitted by the applicant show that 7.5 percent of the total annual patient days in 344 beds operated by Martin Memorial Hospital will be provided to Medicaid and Medicaid HMO patients. More appropriate to this application, financial schedules also show that 11.1 percent of the total annual patient days in the proposed 80-bed facility will be provided to Medicaid and Medicaid HMO patients. Should the project be approved, the applicant will be conditioned to provide 11.1 percent of total annual patient days in the 80-bed facility to Medicaid and Medicaid HMO patients. Martin Memorial is also committing to provide a minimum of $250,000 per year for the first five years of operations for Medicaid and/or charity outreach programs in the western Port St. Lucie area.

j. Martin Memorial’s commitment to the Port St. Lucie area

The applicant provides evidence of Martin Memorial’s history of providing services and outreach activities to the Port St. Lucie community.

Martin Memorial Medical Group, an affiliate of the applicant, employs nine physicians and a nurse practitioner who practices at its outpatient facility in St. Lucie West. The St. Lucie West outpatient facility has provided a central location to draw physicians who wish to serve patients in the western portion of Port St. Lucie. The applicant states that approximately 92 physicians practice in the PSA now, with either a primary or secondary office location in or on a time-share basis. These physicians represent 23 specialties, including: • Cardiology • Cardiopulmonary

14 Martin Memorial Medical Center and Martin Memorial-South combined for AHCA reporting purposes.

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• Dermatology • ENT • Family Practice • Gastroenterology • General Surgery • GYN • Hematology/Oncology • Internal Medicine • Neurology • OB/GYN • Pediatrics • Orthopedics • Oral Surgery • Physical Medicine • Radiology • Radiation Oncology • Urology • Podiatry • Pulmonology

The applicant states that approval of the proposed project on the Tradition site will expand the ability of Martin Memorial to serve the residents of the PSA by providing a comprehensive medical campus that serves most of their medical need, complemented by the St. Lucie West Ambulatory Care Center on Cashmere Boulevard in St. Lucie West.

k. Broad-based community support

The applicant has provided numerous letters of support from the residents of the PSA, physicians, civic leaders, public officials, and others.15

With the establishment of this 80-bed facility, the applicant expects to extend its market a moderate amount to largely capture growth in western St. Lucie County and has provided evidence that it can do this without significantly impacting existing St. Lucie County providers including Lawnwood Regional Medical Center, the facility currently providing the largest share of care to the medically indigent population. The primary impact of the proposal, according to the applicant, will be on its own main campus in Martin County. That facility’s occupancy during the most recent reporting period averaged 61.29 percent. Its satellite

15 Letters of support and/or commitments for partnerships can be found in Attachments 4, 18, 20 and 21.

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facility in south Martin County’s utilization averaged 53.15 percent. There do appear to be geographic access issues, which will be addressed by this proposal, including access issues that impact coastal facilities during storms. Access within the subdistrict are discussed in greater detail in section E.3.a. below.

2. Agency Rule Preferences

The Agency does not have adopted preferences or rule criteria relating to acute care beds. The acute care rule was repealed as a result of statutory changes made on July 1, 2004. The rule repeal was effective April 21, 2005.

3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care,

efficiency, accessibility and extent of utilization of existing health care facilities and health services in the applicant’s service area? ss. 408.035(2), 408.035(7), Florida Statutes. Availability/Access: The applicant has shown area demographics have shifted and that population growth, notably in the western portion of St. Lucie County, is creating traffic congestion that is being looked at by the county. The applicant has noted that the proposed location of this new facility will offer an evacuation facility for all but the strongest storms. It is clear that the location of a hospital in this part of St. Lucie County would improve geographic access to the subdistrict population. The applicant expects to shift admissions from its two existing facilities to the proposed new facility. In doing this, it does not expect to negatively impact the two other subdistrict facilities, which are operated by its competitor, HCA. With the applicant’s proposal to serve the OB population in the new facility and evidence that a large percentage of that population in its PSA is currently seeking services at Martin Memorial along with projected population growth in the applicant’s PSA, its contention that it will not negatively impact either HCA facility is somewhat supported.

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Quality and Efficiency: The applicant indicates that it will collaborate with Torrey Pines Institute for Molecular Studies and plans to locate the proposed facility near the Torrey Pines biotechnology park in Tradition. A letter was submitted which supports this collaboration noting the opportunity for Martin Memorial to work with Torrey Pines to develop an inpatient clinical research unit. There is a potential to improve inpatient care through this research. The applicant currently operates an outpatient facility in western St. Lucie County and currently services a percentage of the patient population in its defined primary service area. This project will offer OB and other non-tertiary services to the population it already serves at its main facility as well as accommodate projected growth in this area. Physicians and other medical staff were identified for the new facility and while there is generally a concern for adequate staffing with any proposal to establish any new facility, as previously noted, this applicant expects a shift in its own admissions from its main facility and a sharing of staff. Discussion was provided regarding existing physician practices near the proposed location. Martin Memorial Health Systems, Inc. is accredited by JCAHO, and additional awards and accreditations are detailed in Volume V under tabs 28 and 29 of the application. The applicant’s quality assessment and improvement plan is included in Volume V, tab 27 of the CON application. For the three-year period ending April 28, 2007, the two Martin Memorial campuses had a combined total of five closed and confirmed complaints: two for EMTALA, two for failure to report incident, and one for physical plant. For the three-year period ending April 28, 2007 St. Lucie Medical Center had a combined total of 15 closed and confirmed complaints: one for nursing service; two for inappropriate discharge; one for restraint, one for plan of care; one for lack of assessment; one for falls/injury; one for emergency access; one for EMTLA; one for discharge planning; one administrative; one medical prob/error/formulary; one for patients rights; one for patient care; and one for untrained/unqualified staff. For the three-year period ending April 28, 2007 Lawnwood Regional Medical Center had a combined total of six closed and confirmed complaints: one for medicine problems/errors/formulary; one for patient

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rights; one for EMTALA; one for patient care; one for phlebotomy; one for surgery unrelated to diagnosis. The following information is provided from the Agency’s CompareCare website.

Florida CompareCare Selected Risk Adjustment Readmission and Risk Adjusted Mortality Rates Ages 18 and Older CY 2005

Hospital

Readmission

Rate

Acute Myocardial Infarction

Adult Open Heart

Provider

Acute Stroke

Primary Stroke Center

Pneumonia Statewide

3.66%

6.66%

Not Applicable

8.90%

Not Applicable

5.15%

St. Lucie Medical Center 2.95% 8.76% No 6.36% No 4.73% Lawnwood Regional Medical Center 3.92% 6.87% Yes 7.12% Yes 4.22% Martin Memorial Medical Center 4.12% 5.73% No 8.42% No 4.53% Martin Memorial Hospital South 3.06% 12.38% No 8.71% No 4.26%

Source: The results shown are posted as reported and certified by health care facilities to the Agency for Health Care Administration (AHCA), Florida Center for Health Information and Policy Analysis. This data is effective as of March 16, 2006.

The percentage rate reported on this page reflects each hospital’s unique population, and should not be compared between hospitals. Instead it is strongly recommended to compare each hospital on the basis of whether their rates are “as expected”, “lower than expected” or “higher than expected.” All above “%’s” with the exception of the 12.38 percent at Martin Memorial Hospital South for acute myocardial infarction were as expected.

Florida CompareCare Overall Surgical Infection Prevention Measures Ages 18 and Older April 2005 through March 2006

Hospital

Surgery Patients Who

Received Antibiotic(s) One Hour Before Incision (when

appropriate)

Surgery Patients Whose Preventative Antibiotic(s)

are Stopped Within 24 hours After Surgery (when

appropriate) US Average 75% 70% Top 10% Nationwide 94% 96% Florida Statewide Average 79% 66% St. Lucie Medical Center 88% of 173 Patients* 39% of 168 Patients* Lawnwood Regional Medical Center

88% of 175 Patients* 69% of 172 Patients*

Martin Memorial Medical Center 95% of 220 Patients 67% of 213 Patients Source: The results shown are posted as reported by the U.S. Department of Health and Human Services. This data is effective as of December 8, 2006. *Rate reflects fewer than the maximum possible quarters of data for the measure Note: The following Surgical Infection Prevention (SIP) measures represent the best practices for the prevention of infections of reporting hospitals after selected surgeries: colon surgery, hip and knee arthroplasty, abdominal and vaginal hysterectomy, cardiac surgery, coronary artery bypass grafts (CABG), and vascular surgery. Higher percentages are better. The applicant is basing need for this project on the concentration of the population in the proposed service area, projected growth of the service area, and the geographic and travel time barriers to access. There is evidence of geographic access issues.

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http://www.hospitalcompare.hhs.gov/

http://www.hospitalcompare.hhs.gov/


b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality of care? Is the applicant a Gold Seal Program nursing facility that is proposing to add beds to an existing nursing home Martin Memorial Health Systems, Inc. is accredited by JCAHO, and additional awards and accreditations are detailed in Volume V, Tabs 28 and 29 of the application. The applicant’s quality assessment and improvement plan is included in volume V, tab 27 of the CON application. For the three-year period ending April 28, 2007, the two Martin Memorial campuses had a combined total of five closed and confirmed complaints: two for EMTALA, two for failure to report incident, and one for physical plant. The applicant pledges a commitment to the Port St. Lucie area and attributes the quantity of support letters for the project to its service to the area. The applicant operates inpatient and outpatient facilities, co-operates a non-emergency patient transport service and provides a host of patient wellness programs. Other awards and accomplishments are: • Inclusion in Verispan’s list of the “best of the rest” in its 2007 Survey

of Integrated Healthcare Networks; • Consumer Choice Award for Port St. Lucie/Fort Pierce MSA for

2005/2006 and 2006/2007; • Inclusion among the 100 Top Hospitals and Top 20 Large Community

Hospitals; • Inclusion as one of America’s Best Hospital’s in U.S. News & World

Report; and • JCAHO accreditation with commendation as a medical center and

total network.

c. What resources, including health manpower, management personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation? This review is for Martin Memorial Medical Center, Inc., applying to establish an 80-bed acute care hospital in District 9, Subdistrict 2, St. Lucie County, Florida. The financial impact of the project will include the project cost of $116,970,000 and year two operating costs of $60,443,558. The audited financial statements of the applicant, for the periods ending September 30, 2005 and 2006 were analyzed for the purpose of

29


evaluating the applicant’s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant’s current ratio of 4.5 is well above average indicating current assets are four and a half times current liabilities, a strong position. The ratio of cash flows to current liabilities of 0.7 is average and an adequate position. The working capital (current assets less current liabilities) of $106.8 million is a measure of excess liquidity that could be used to fund capital projects. Overall, the applicant has a good short-term position. (See table below). Long-Term Position: The ratio of long-term debt to net assets of 1.2 indicates long-term debt is greater than equity. This is well above average and a weak position. The ratio of cash flow to assets of 7.7 percent is slightly below average and an adequate position. The most recent year had $12.6 million of income from operations, which resulted in an operating margin of 4.7 percent. Overall, the applicant has a slightly weak but adequate long-term position. (See table below). Capital Requirements: Schedule 2 indicates the applicant has capital projects and maturities of long-term debt through 2010 totaling $211.8 million. In addition, the applicant is projecting a year one and year two operating loss of $7.2 million and $1.8 million for this project respectively. The applicant is projecting funding these losses through the profitability of its existing operations. The applicant is projecting a 3.1 and 3.3 percent operating margin from existing operations without this project which is slightly below the 4.4 percent operating margin the applicant reported in 2005. Available Capital: Funding for this project will come from $117 million from tax exempt bond financing. Operating cash flows for the most recent year was $21.4 million. As discussed above, working capital is $106.8 million. The applicant provided a letter dated March 28, 2007, from Ziegler Capital Markets Group (Ziegler). The letter indicates Ziegler’s commitment to underwrite $117 million of a tax-exempt bond issue for this project. The

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applicant is also affiliated with the Martin Memorial Foundation, Inc. (Foundation). The Foundation is another source of potential funding with $14.2 million in net assets.

MARTIN MEMORIAL MEDICAL CENTER, INC.

9/30/2006 9/30/2005 Current Assets $137,454,000 $127,106,000 Cash and Current Investment $79,011,000 $79,483,000 Assets Limited as to Use $5,681,000 $5,885,000 Total Assets $276,119,000 $249,830,000 Current Liabilities $30,623,000 $32,784,000 Total Liabilities $166,363,000 $159,665,000 Net Assets $109,715,000 $90,122,000 Total Revenues $268,363,000 $254,816,000 Interest Expense $4,824,000 $4,738,000 Excess of Revenues Over Expenses $12,629,000 $23,438,000 Cash Flow from Operations $21,359,000 $31,188,000 Working Capital $106,831,000 $94,322,000

FINANCIAL RATIOS 9/30/2006 9/30/2005 Current Ratio (CA/CL) 4.5 3.9 Cash Flow to Current Liabilities (CFO/CL) 0.7 1.0 Long-Term Debt to Net Assets (TL-CL/NA) 1.2 1.4 Times Interest Earned (NPO+Int/Int) 3.6 5.9 Net Assets to Total Assets (TE/TA) 39.7% 36.1% Operating Margin (ER/TR) 4.7% 9.2% Return on Assets (ER/TA) 4.6% 9.4% Operating Cash Flow to Assets (CFO/TA) 7.7% 12.5%

Staffing: Schedule 6A indicates 409.5 FTEs for the hospital project by the end of year three (September 30, 2013). Various positions including physicians are not accounted for on this schedule, and this is most likely due to sharing resources with the two existing applicant facilities. In year three, the proposed hospital is projected to employ 146.8 FTEs of RN’s, zero LPN’s, 47 FTEs of nursing aides, and 9.6 FTEs for other nursing directors and managers. Other FTEs on Schedule 6A are as follows: Ancillary: 2.0 FTEs of physical therapists, 1.0 FTE speech therapist, 1.0 FTE occupational therapist, 80.9 FTEs other ancillary; dietary: 2.8 FTEs dietary supervisors, 8.8 FTEs cooks, and 8.8 FTEs dietary aides; social services: 1.1 FTEs social services director; housekeeping: 1.0 FTE housekeeping supervisor, 19.9 FTEs housekeepers; laundry: 7.2 FTEs laundry aides, zero FTEs for laundry supervisor and plant maintenance: 9.6 FTEs maintenance assistance, 4.6 FTEs security. Staffing

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projections are based on projected utilization and assume fixed/variable ratios consistent with the applicant’s experience. Conclusion: With this project, the applicant will continue to be highly leveraged. However, with the resources of the applicant and commitment from Ziegler, funding for this project and all capital projects should be available as needed. (Note: This conclusion is based on the assumption that the architectural review has revealed no material items that would affect the cost of the project).

d. What is the immediate and long term financial feasibility of the proposal? ss. 408.035, Florida Statutes

A comparison of the applicant’s estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions contained in Schedules 7 and 8), and efficiency, (the degree of economies achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired outcome. These relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may, either go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. The applicant has stated that the new hospital will serve the patient population in the following zip codes: Primary (34953, 34983, 34984, 34986, 34987, and 34988) Secondary (34952, 34957, 34958, 34981, 34982, and 34985). Case mix data was tested using the patients discharged from short-term acute care hospitals in the indicated zip codes during 2005, excluding DRG’s for services not provided and DRG’s discharged from long-term care hospitals. The computed case mix index for these cases was 1.1817. Therefore, based on the range of services offered, number of beds and estimated patient days, as well as the computed case mix index; the applicant will be compared to the hospitals in Group 2. Per diem rates are projected to increase by an average of 3.7 percent per year. Inflation adjustments were based on the new CMS Market Basket, 1st Quarter, 2007.

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Gross revenues, net revenues, and costs were obtained from Schedules 7 and 8 in the financial portion of the application. These were compared to the control group as a calculated amount per adjusted patient day. Projected net revenue per adjusted patient day (NRAPD) of $2,019 in year one and $2,078 in year two is between the control group median and highest values of $1,714 and $2,539 in year one and $1,767 and $2,618 in year two. With net revenues falling between the median and highest level, the facility is expected to consume health care resources in proportion to the services provided. (See table below). Schedule 7 indicates that 11.1 percent of the total annual patient days in the 80-bed facility will be provided to Medicaid and Medicaid HMO patients. The payer mix in the service area appears sufficient to support the proposed condition with approximately 12 percent of patient days falling into the Medicaid, Medicaid HMO, and charity categories. All other payer mix assumptions are consistent with the payer mix in the service area. Anticipated cost per adjusted patient day (CAPD) of $2,359 in year one and $2,143 in year two is between the group median and highest values of $1,593 and $2,461 in year one and $1,642 and $2,538 in year two. The highest level is generally viewed as the practical upper limit on efficiency. With anticipated cost between the median and highest value in the control group, the year two cost appear reasonable. (See table below). The applicant is projecting a decrease in CAPD between year one and year two of approximately 9.2 percent. It should be noted that this application is for a new acute care hospital. The first year of operation has a below average occupancy rate. The low occupancy rate decreases economies of scale and as the occupancy rate increases, CAPD would be expected to decrease. The year two projected operating loss for the project of $1.8 million computes to an operating margin per adjusted patient day of a negative $65 which is between the control group median and lowest values of a positive $86 and a negative $263. The applicant is projecting a $4.7 million gain or 5.6 percent operating margin by the end of the third year with both NRAPD and CAPD falling between the group median and highest values in year three. Conclusion: This project appears to be financially feasible.

MARTIN MEMORIAL MEDICAL CENTER, INC. CON # 9981 Sep-12 YEAR 2 VALUES ADJUSTED 2005 DATA Peer Group 2 YEAR 2 ACTIVITY FOR INFLATION ACTIVITY PER DAY Highest Median LowestROUTINE SERVICES 134,010,381 4,752 1,575 649 335

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INPATIENT AMBULATORY 0 0 357 132 55 INPATIENT SURGERY 0 0 0 0 0 INPATIENT ANCILLARY SERVICES 0 0 6,022 3,131 1,438 OUTPATIENT SERVICES 89,126,922 3,160 6,679 2,701 1,518 TOTAL PATIENT SERVICES REV. 223,137,303 7,912 13,582 6,523 4,177 OTHER OPERATING REVENUE 691,726 25 101 8 1 TOTAL REVENUE 223,829,029 7,936 13,606 6,529 4,191 DEDUCTIONS FROM REVENUE 165,210,625 5,858 0 0 0 NET REVENUES 58,618,404 2,078 2,618 1,767 1,420 EXPENSES ROUTINE 14,370,180 510 358 259 185 ANCILLARY 13,859,806 491 860 548 415 AMBULATORY 0 0 0 0 0 TOTAL PATIENT CARE COST 28,229,986 1,001 0 0 0 ADMIN. AND OVERHEAD 19,033,709 675 0 0 0 PROPERTY 13,179,863 467 0 0 0 TOTAL OVERHEAD EXPENSE 32,213,572 1,142 1,366 747 581 OTHER OPERATING EXPENSE 0 0 0 0 0 TOTAL EXPENSES 60,443,558 2,143 2,538 1,642 1,403 OPERATING INCOME -1,825,154 -65 341 86 -263 -3.1% PATIENT DAYS 16,886 ADJUSTED PATIENT DAYS 28,204 TOTAL BED DAYS AVAILABLE 29,200 VALUES NOT ADJUSTED ADJ. FACTOR 0.5987 FOR INFLATION TOTAL NUMBER OF BEDS 80 Highest Median LowestPERCENT OCCUPANCY 57.83% 98.8% 57.9% 35.3% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 1,255 7.4% MEDICAID 1,718 10.2% 21.0% 7.2% 1.9% MEDICAID HMO 185 1.1% MEDICARE 7,029 41.6% 81.4% 55.9% 45.1% MEDICARE HMO 781 4.6% INSURANCE 513 3.0% HMO/PPO 5,405 32.0% 38.6% 23.9% 6.7% OTHER 0 0.0% TOTAL 16,886 100%

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e. Will the proposed project foster competition to promote quality and

cost-effectiveness? Competition to promote quality and cost-effectiveness is generally driven by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/cost in order to remain viable in the market. It is noted that this applicant already serves this area and is already competing in this market. The applicant expects to not impact its competitor in this market because it will largely impact its own facilities. As discussed earlier under section E. 3.a of this report, there is no evidence that this project will foster competition and cost-effectiveness to promote quality and cost-effectiveness.

f. Are proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss. 408.035(10), Florida Statutes; Chapter 59A-3 or 59A-4 Florida Administrative Code. The applicant proposes to construct a new 80-bed acute care hospital consisting of 136,670 GSF. The facility is to be built in a planned-community development in the western portion of Port St. Lucie. The room complement will be made up of all private rooms and will have a bed configuration of 60 general medical/surgical beds (including eight telemetry beds), eight critical care beds, and 12 labor/delivery/recovery/ post-partum beds. The requirement to provide at least 10 percent of the patient rooms to be handicapped accessible appears to be met by the plans as submitted. The functions of the proposed satellite hospital are to be located in a two-story, non-combustible construction that will be fully sprinklered and are defined as follows: • First floor: First floor contains the emergency department, imaging

department, surgical department, obstetrical unit and intensive care unit, entry/lobby for patient/visitor drop-off, as well as administrative and support function spaces.

• Second floor: Second floor contains two medical/surgical nursing units, waiting rooms, physical therapy unit and storage rooms.

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There are two public elevators and two staff elevators that provide the vertical transport in the facility. This arrangement provides a good circulation flow that limits the amount of cross-traffic between staff, patients and the general public. The emergency department has a separate ambulance and walk-in entrance that are easily recognizable. There is no indication that a decontamination room will be provided. It should be noted that this is a required space which is to be located as far as possible from other building entrances. All of the operating rooms appear to meet the design code requirements. The PACU is well located and contains six recovery stations which appear to be adequately sized. The current layout of the staff and physician changing areas facilitate one way traffic, allowing the users to move directly into the OR suite upon exiting the changing area. The ICU is served by a central nurse station that has good visual control of a majority of the ICU rooms. An adjacent nursing unit intended for less critical patients has been provided. The rooms meet the requirements for medical/surgical beds. Patient support areas appear to be sufficient for all required functions. The ICU is conveniently located adjacent to the surgery suite. The medical/surgical units on the upper floors appear to meet the requirements of the code. These units are laid out well and appear to provide for an efficient use of space by combining essential support functions into a central hub. The proposed project, as submitted, will require further development, but it appears to be a well thought out design. The applicant states the construction will conform to all current applicable building codes, including the National Fire Protection Association codes and the requirements of the Florida Building Code.

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The designed professional should be aware that the project will be subject to the requirements of the 2006 AIA Guidelines for Design and Construction of Hospitals and Health Care Facilities. The construction cost of $442.00 per square foot is comparable to the cost of similar projects reviewed recently. The construction schedule from building permit approval to final survey is appropriate for this project. The plans submitted with this application were very schematic in detail with the expectation that they will necessarily be revised and refined during the design development (preliminary) and contract document stages. The architectural review of the application shall not be construed as an in-depth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner.

g. Does the applicant have a history of providing health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss. 408.035(11), Florida Statutes.

The following table illustrates the medical and charity care provisions of Subdistrict 2 facilities for fiscal year (FY) 2005:

Subdistrict 2 Medicaid and Charity Care Provisions for FY 2005 Facility

Medicaid

Medicaid HMO

Charity Care

Total

St. Lucie Medical Center 8.2% 8.3% 1.2% 9.4% Lawnwood Regional Medical Center 17.4% 17.6% 2.1% 19.5% Martin Memorial Medical Center 6.8% 7.4% 3.4% 10.2% Average Subdistrict 2 10.8% 11.1% 2.2% 13.0% Source: Florida Hospital Financial Data FY 2005 The applicant has demonstrated a history of providing health services to Medicaid patients and the medically indigent. The applicant has stated that it will provide a minimum combined 7.5 percent to include the percentage of Medicaid and Medicaid HMO inpatient admissions compared to inpatient admissions plus the percentage of charity care inpatient gross revenues compared to total inpatient gross revenues. (Although it is not clear what this means, schedules submitted by the applicant show that 7.5 percent of the total annual patient days in 344 beds operated by Martin Memorial Hospital will be provided to Medicaid and Medicaid HMO patients. More appropriate to this application, financial schedules also show that 11.1 percent of the total annual patient days in the proposed 80-bed facility will be provided to Medicaid and Medicaid HMO patients. Should the project be approved, the applicant will be conditioned to provide 11.1 percent of total annual

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patient days in the 80-bed facility to Medicaid and Medicaid HMO patients).

F. SUMMARY Martin Memorial Medical Center, Inc. (CON #9981) is applying to establish an 80-bed acute care hospital in St. Lucie County, District 9, Subdistrict 2. The applicant is a private, not-for-profit corporation operating Martin Memorial Medical Center and Martin Memorial Hospital – South under a common license, with a combined bed count of 344 beds. Both hospitals are located within the applicant’s proposed service area, District 9, Subdistrict 2 (Martin and St. Lucie Counties). Three hundred thirty-nine of these are designated for acute care, with the remaining five beds designated NICU Level II. The proposed site is within a planned community in western St. Lucie County, which is not owned by nor affiliated with the applicant. The total project cost is estimated at $116,970,000. Construction costs are projected at $47,834,500 and the project will involve 136,670 GSF of new construction. After weighing and balancing all relevant criteria, the following issues are presented:

Need/Other Special Circumstances: There is no fixed need pool published for acute care beds. Applicants must demonstrate need for new acute care facilities. With the establishment of this 80-bed facility, the applicant expects to extend its market a moderate amount to largely capture growth in western St. Lucie County and has provided evidence that it can do this without significantly impacting existing St. Lucie County providers including Lawnwood Regional Medical Center, the facility currently providing the largest share of care to the medically indigent population. The primary impact of the proposal, according to the applicant, will be on its own main campus in Martin County. That facility’s occupancy during the most recent reporting period averaged 61.29 percent. Its satellite facility in south Martin County’s utilization averaged 53.15 percent. There do appear to be geographic access issues, which will be addressed by this proposal, including access issues that impact coastal facilities during storms.

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Quality of Care: The applicant has a history of providing quality of care. Medicaid/charity care: The applicant has demonstrated a history of providing health services to Medicaid patients and the medically indigent. Pro forma projections show that the proposed hospital will provide 11.1 percent of its total annual patient days in the 80-bed facility to Medicaid and Medicaid HMO patients. Financial Feasibility: Overall, the applicant has a good short-term position and a slightly weak but adequate long-term position. With the resources of the applicant and commitment from Ziegler Capital Markets Group, funding for this project and all capital projects should be available as needed. This project appears to be financially feasible. Architectural Analysis: Overall, the proposed project, as submitted, is well designed to be functional and efficient. It is an exciting plan of a high rise building that not only is compact and utilitarian but is also architecturally pleasing. Patients, staff and visitors will have a unique experience as they move through these spaces and will have access to magnificent views both inside and outside wherever they are in the building.

The construction cost of $442 per square foot seems high for this kind of building. The construction schedule from building permit approval to final survey is appropriate for this project.

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G. RECOMMENDATION

Approve CON #9981 to establish an 80-bed acute care hospital in St. Lucie County. Total project cost is $116,970,000. Construction costs are $47,834,500 and the project will involve 136,670 GSF of new construction. Conditions: • Martin Memorial will partner with Torrey Pines Institute for Molecular

Studies for the provision of resources associated with clinical trials and life science research.

• Martin Memorial will continue to support the Volunteers in Medicine program with free inpatient and outpatient hospital services, outpatient laboratory, diagnostic and treatment services at a value of no less than $750,000 of charges per year for the next 10 years.

• Martin Memorial will provide support to other community social services organizations in the form of cash, goods and services valued at not less than $75,000 annually for the next 10 years. This represents a commitment of $750,000 to support organizations such as Meals on Wheels, American Cancer Society, American Heart Association, etc.

• Martin Memorial will support Florida Atlantic University Nursing School, Indian River Community College and other area nursing and allied health schools with at least $75,000 per year in services or goods for the next 10 years to help ensure an adequate supply of well-trained health care professionals.

• Martin Memorial will establish a volunteers program (based on its current successful program in Martin County) in the Port St. Lucie area to involve local high schools in encouraging teens to volunteer in health care settings and to encourage health care careers.

• Martin Memorial will partner with the St. Lucie school system in the development of a High School Medical Academy.

• Martin Memorial will make the West Port St. Lucie Hospital available as a training site for area nursing and allied health schools and for the Florida State University physician training program.

• Martin Memorial commits to develop West Port St. Lucie Hospital south of Tradition Parkway, east of Village Parkway, adjacent to the Torrey Pines headquarters and the I-95 Gatlin Boulevard exit.

• Martin Memorial will provide a minimum of 11.1 percent of its total annual patient days in the 80-bed facility to Medicaid and Medicaid HMO patients.

• Martin Memorial will provide a minimum of $250,000 per year for Medicaid and/or charity outreach programs within west Port St. Lucie area for the first five years of operation.

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AUTHORIZATION FOR AGENCY ACTION

Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State Agency Action Report.

DATE: Karen Rivera Health Services and Facilities Consultant Supervisor Certificate of Need Elizabeth Dudek

Deputy Secretary, Health Quality Assurance

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Documents

STATE AGENCY ACTION REPORT - The Agency For …ahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/9981.pdfSTATE AGENCY ACTION REPORT ... Representative, Joe Negron of District 82, Stuart,